It seems that Santa will be scaling back on his gifts this Christmas. Retail observers predict that holiday 2001 will see the softest sales in years. Fears that consumers will be keeping their wallets closed have led some catalogers to offer more promotions and incentives than they have in seasons past.
“If it were my business, I would do whatever I could to bring in revenue this time of year,” says Glenda Shasho Jones, president of the New York-based consultancy Shasho Jones Direct. “It is typically the most important time of year [for consumer mailers], and not a time when catalogers can afford to take any chances on losing sales.”
That’s the philosophy of Westerly, RI-based gifts mailer The Paragon. “We have never been a highly promotional company, but we will probably offer more specials this year because of the economy,” says president Steven Rowley. As of late August, the company had yet to decide which items it would offer at sale prices, but it plans to highlight those items near the order form. “What we offer will be determined by how the season goes,” Rowley says. “We’re planning to make that call as late as we can in the season.”
Oshkosh, WI-based gifts mailer Miles Kimball is offering a half-price discount on several best-selling books, including Bridget Jones’s Diary and The Wedding, but only on its Website, says president/CEO Mike Muoio. The company will also promote on its catalog covers and order forms free gifts, such as tote bags, ornaments, and timers, for orders of $40 or more. And to some prospects, Miles Kimball will offer free shipping and handling for orders of $40 or more. The cataloger frequently uses such promotions during the off season, but rarely turns to them during fall/holiday.
Midlothian, VA-based TechnoBrands, which mails the high-tech gifts catalog TechnoScout, is taking a more unusual approach: a telemarketing incentive. “We will call one group of customers and advise them that their catalog is in the mail and offer them a free product if they place an order over a certain dollar amount from the catalog,” explains catalog manager Sharydul Pandya.
Pandya says the company had done in-the-mail A/B tests for about four years but stopped about a year and a half ago “because we thought that the costs of the tests outweighed the benefits of the results.” The telemarketing program does not involve live phone reps but rather a 30-second automated message, “so the cost is not exorbitant,” Pandya says.
Getting a jump-start
To be sure, as of Labor Day there wasn’t yet an obvious trend of more catalogers offering more promotions. But Allen Rosenberg, partner/executive vice president at New York-based consultancy Marke Communications, says that catalogers will be offering promotions earlier this season. “For example, we have a furniture cataloger as a client that typically offers a deferred payment option around the holidays,” he notes. “Normally it’s offered in a later drop — say, the third of the three drops — but this year it’s being offered in the first drop.”
Also, Rosenberg says, catalogers plan to offer promotions to prospects as well as customers well into the holiday season, instead of during fall only: “For example, we have a client that is giving 20% off the first order to first-time customers in the holiday books, not just in the fall books.”
The discount dilemma
Some catalogers are working harder to get customers to buy without giving away the store. “I’ve noticed catalogs with a dot whack promoting ‘more than 200 new products’ as a way of getting customers’ attention and getting them inside the book,” Rosenberg says.
Indeed, The Paragon’s Rowley is against discounts and similar promotions “because we prefer not to train our customers” to seek out or wait for special offers. San Francisco-based gifts cataloger Red Envelope has a similar reason for eschewing discounts or other incentives. “The issue for us is how much do we undermine our long-term premium-brand positioning by being too aggressive with discounts,” says CEO Martin McClanan.
The company will offer a 15% discount to existing buyers in October. It is the third year for the promotion, although in the past the discount was only 10%. Other than that offer, Red Envelope has no promotion plans, save for the possibility of a free shipping upgrade later in the season. “Last year we evaluated the long-term value of customers who bought from us for the first time by discount,” McClanan says. “Their value was lower than those who buy for reasons other than for discount.”
Even in these tough economic times, “catalogers don’t want to cheapen the brand by offering too many promotions,” says Andy Russell, president/ CEO of New York-based consultancy AGA Catalog Marketing and Design. “They have to walk a fine line between enhancing values and their promotional messages while maintaining the brand’s identity. They don’t want to be seen as discounters.”
Loyalty to its wholesale clients, rather than the issue of perceived value, is why outdoor gear and apparel manufacturer/marketer Patagonia won’t offer incentives or promotions in its catalog, says catalog director Morlee Griswold. The Ventura, CA-based company does not want to undercut the prices of other retailers that sell Patagonia products. “We have to maintain a pricing integrity between our wholesale and retail businesses and our catalog,” Griswold says. “We don’t want to be discounting beyond our wholesalers’ control.”
Tried and true
Of course, some catalogers, such as multititle gifts cataloger Lillian Vernon, typically run holiday promotions. This year the Rye, NY-based mailer is offering free shipping and handling on orders of $50 or more, says spokesperson David Hochberg. The promotion, which is offered in the company’s core catalog and its children’s title, Lilly’s Kids, has a Nov. 15 cutoff. In addition to stimulating sales, Hochberg says the promotion also serves to generate more business earlier in the season. The more orders received before December, the easier that month will be for the cataloger’s distribution center staff.
Cashmere, WA-based food gifts cataloger Liberty Orchards is running three promotions this holiday season, says its president Greg Taylor. The first gives customers a free box of candy with every order of $50 or more placed by Nov. 8. The second offer begins mid-November and will be effective until the end of the season; it gives customers who spend $75 or more free gift-wrapping on all items. “As for our best buyers, we’re offering a free shipping upgrade in December,” Taylor says. All of the offers have worked in the past, he says, so the company has decided to use all three this holiday season.
But Taylor insists he isn’t using the offers as a defensive strategy to help counteract the effects of the slow economy. In fact, he contends that “relatively low- to moderate-priced food gifts tend to do well in weak economies.” Prices for Liberty Orchards products range from less than $10 for a box of chocolates to $112 for a deluxe gift assortment. “We’ve not found that we suffer when the economy is weak. We’re just trying to increase the average order size and bump up response rate,” Taylor says. Liberty Orchards mails about 5 million catalogs during the holiday season, 1.5 million of which are to prospects, and typically generates a $60 average order.
Online or not at all
Although it is not offering any holiday incentives or promotions in its print catalog, Norwich, VT-based baking products mailer King Arthur Flour is counting on specials in its online newsletter to increase response. The Website’s e-newsletter, The Round Table, is typically sent biweekly, but this year will be e-mailed weekly from Halloween through Christmas to its 50,000-plus subscribers. While the newsletter features recipes and links to the Website, it will also include weekly discounts or specials, such as buy-one-get-one-free or free shipping upgrades. “We’ll test it this holiday season and see how it goes,” says spokesperson Shannon Zappala. Depending on response, the company might continue the newsletter as a weekly with specials even after the holiays.
Middletown, WI-based Pleasant Co., whose titles include the American Girl dolls catalog, believes that demand for its proprietary products does not warrant many promotions or incentives. The company’s Website is offering an e-commerce sweepstakes for 28 days beginning Oct. 15. Spokesperson Julie Parks says it’s not a holiday-related incentive, though she concedes that it “could encourage holiday shoppers.” As is the case at Lillian Vernon, the company hopes the promotion will persuade customers to buy earlier in the holiday season.
— Additional research by Ellen Hansen and Paul Miller
A Smattering of Offers
Apparently it’s never too early to make buyers a good offer. Even among the fall/holiday catalogs received by Catalog Age in August, we noticed a number of promotions:
- The Brookhaven Collection catalog of personalized holiday cards offers 50% off orders placed before Dec. 7.
- As it did last year, teen girls’ apparel cataloger Girlfriends L.A. offers several promotions with its back-to-school catalog: free shipping on online orders over $75; a locker organizer with every $80 purchase (while supplies last), and a Jessica Andrews CD single with every purchase of a Curious George T-shirt (again, while supplies last).
- The cover of Good Catalog’s Home Collection Fall 2001 edition promotes free standard shipping on selected items. The offer is good through the end of the year.
- On the cover of its Harvest Festival 2001 book, just below the cover line “Keep this catalog: Order throughout the holidays,” food gifts mailer Harry and David declares: “Shop today. Don’t pay until February! (See details inside).” Once inside, however, you learn that the offer applies only if you open a Harry and David credit-card account.
- “Free Shipping. See p.3” reads a faux dot whack on the Fall 2001 edition of L.L. Bean. Inside, a postcard explains that customers receive free standard FedEx delivery within the 48 contiguous states with an order from the catalog.
- Home goods purveyor Martha by Mail touts “save 20% on your order!” on the cover dot whack on its Fall 2001 catalog. A card inside explains that customers receive 20% any order of at least $100, 15% off any order of $75-$99, and 10% off any order of $50-$74, through Oct. 12.
- Men’s apparel cataloger Paul Fredrick offers free shipping on all orders of at least $100 made by Sept. 30.